Fannie Mae-No Politics (FNMA)

[familymang]

So its clear that McNuchin and Calabria felt that UST would have to write down at least part of their SPS position - correct?

No, a writedown is very different than a conversion where you cant realize the full value of the LP. A writedown is what tsy called to be politically a non starter and not legal, a conversion to common where the ultimate value is determined by the market and may not ultimately recoup the full value of their LP, so a haircut. Treasury was ok taking a haircut via conversion, they were not ok doing a writedown, big difference. Calabria had to explain this dynamic to Warner, in a cramdown conversion, UST wouldnt recoup the full value of their LP. Very different than UST writing down its LP balance as they get no common shares in that scenario.

So you are assuming that when Calabria wrote .."Mnuchin was open to placing all the equity holders, in a similar spot." - Mcnuching did not really mean ALL just the JPS and the UST SPS? Why do you assume that ? Common is equity and all is every class of equity.?

No I am not ASSUMING, Calabria literally clarifies what it means in the very next sentence. Because if you cared enough to read the next sentence right after that, he makes it very clear that "all equity holders" are in reference specifically to UST and JR PFDS converting over to common.

"Mnuchin was open to placing all the equity holders, including Treasury, in a similar spot. That is, he was willing to see treasury's senior preferred shares given the same seniority as the existing junior preferred." - In this scenario, now all the equity holders (sps,jps, and common) all own the same equity class, common. The only different is the % ownership. UST prob owns 90-95% of the common, JPS owns 5-10%, and common owns close to 0.01%.

When you put it together with all the other quotes I highlighted to you, its very clear he is talking about a cramdown where both classes of pfds (snr + jps) convert to common equally, and if you dont see that, its a reading mis-comprehension on your part.